What The Tea Parties Are About
This is both an interesting, and scary graph. The most important thing to me is not just the sheer magnitude of the Obama deficits, but the respective trends of both administrations.
Note that the Bush deficit was decreasing every year until 2008, when it got hammered by the TARP (at least I’m assuming that’s the cause, though it could also be a result of the slowing economy throughout the year, not to mention Congressional spending increases under the Democrats starting in late 2007). Note also that this was happening despite the evil Bush “tax cuts” (which obviously weren’t really tax cuts — they were just tax rate cuts that actually were reducing the deficit, despite the out-of-control spending by the Republican Congress).
In contrast note that the Obama plan is ever-increasing deficits after 2012, whether you believe administration or CBO projections. And though they decrease in the near term, they never get as low as the worst Bush deficit before they start to sky rocket in the teens. This, simply put, is fiscal insanity. And increasing taxes on “the rich” (as they’d surely love to do if they could get away with it) isn’t an option. There simply isn’t enough money there, and if there were, it would tank the economy even more, with even larger deficits from reduced tax receipts and automatic increases in non-discretionary wealth transfers. Also, estimate the integral under the curve. That’s an accumulating debt, with an ever-increasing proportion of the deficit going to interest, particularly when people become reluctant to loan money to a budding Weimar at low rates.
People who will be protesting on Wednesday won’t be protesting against a party. They’ll be protesting against a government completely out of control. But unfortunately for the Democrats and the left, they will be seen as the much larger part of the problem, because the Republicans are now at least giving lip service to reduced spending and reduced government. But they’re going to have to work very hard to live down their spending spree of the “compassionate conservative” (read, “progressive lite”) Bush years.
[Evening update]
“Liberal doughboys afraid of tea parties.”
Liberal bloggers and media groups can’t get the Tea Party phenomenon out of their heads. It wasn’t supposed to be this way, to them. Ordinary people getting together to protest against the liberal establishment. There is a cognitive disconnect. There must be a plot; the vast right-wing conspiracy at work.
So true to form, Media Matters sounded the horn that this was not a real protest, it’s a Fox News segment. Kind of a made for T.V. reality show, with a cast of tens of thousands. Think Progress joined in with “Spontaneous Uprising? Corporate Lobbyists Helping To Orchestrate Radical Anti-Obama Tea Party Protests.”
And the netroot blogosphere heard the call. FireDogLake proprietor Jane Hamsher posted “What Part of ‘FNC TAX DAY TEA PARTIES’ Don’t You Understand?” Hamsher also promoted “citizen-organized protests” which were unlike the “Fox-organized” Tea Parties; I guess she didn’t catch the irony of promoting counter-protests to protest other people promoting protests. Anyway, almost no one showed up for the counter-protests.
Gee, I think I have one of those in comments.
[Monday morning update]
More tea-party panic:
What’s the big deal? ACORN, MoveOn, and Soros get to pull puppet strings year after year, and that’s ok. But God forbid Fox News puts so much as its imprimatur on Tea Parties! No way! That’s too sinister, too insidious; and makes the whole movement illegitimate and inauthentic. Whatever…
Jane Hamsher and Oliver Willis are probably asking “Who the hell are this Tea Party bunch? Where did they come from?” I’ll tell you who they are, Jane and Oliver. They’re your worst nightmare: they’re small-governmenters first and party-loyalists second.
And we’re not laughing with you, Jane and Oliver. We’re laughing at you.
[Bumped]
[Update a few minutes later]
More on Crazy Jane and the other panicked and paranoid leftists (like my commenter):
She’s implying because freedomworks listed the Texas Tea parties and Dick Armey is part of freedomworks that the Tea Parties, Houston in particular, are being organized by “Corporate lobbyists”. Houston Tea Party has never spoken with Freedomworks or Dick Armey, though we do know that Freedomworks has offered legal advice to different Tea parties, we’ve not sought it. None of that should imply they are running the show unless you go to the point of just making stuff up.
The “Corporate lobbyist” line is a laugh. Felicia is a local Mother of two who worked with some local grassroots groups like Raging Elephants. I was someone who was trying to be apolitical the past 4 years until I took a good look at was going on, and I was laid off last week and currently unemployed. There are other organizers and volunteers with us. None of them come close to the description “Corporate Lobbyist”.
And no, this woman is nuts, Fox News is not organizing the Tea Parties, they’re just jumping on board (like a lot of people are trying to). But she’s seeing Dick Armey and Fox News as the boogeymen in the closet…
So… I’ve had my LMAO moment for the day. How about you?
Edit: More on this silliness:
If we’re being organized by “corporate lobbyists” then where the heck is my check?
Yeah, me too. How do I get in on this hot “corporate lobbyist” action?
April 12th, 2009 at 10:00 am
[...] (via Instapundit and Transterrestrial Musings) [...]
April 12th, 2009 at 11:11 am
The 2009 deficit was well over a trillion before Obama even took office.
Lobbyists like Dick Armey can organize astroturf stunts like the tea parties all they want. But they don’t have any answers; they just want more tax cuts for their corporate clients.
April 12th, 2009 at 11:16 am
Lobbyists like Dick Armey can organize astroturf stunts like the tea parties all they want.
That’s one of the most hilariously stupid things you’ve posted here, and that’s a pretty high bar.
April 12th, 2009 at 11:48 am
Are you saying that Dick Armey and other lobbyists aren’t involved in organizing the tea parties?
April 12th, 2009 at 11:55 am
Are you seriously arguing from the position that the Bush tax cuts or something similar should or will be around in the future? Everything you said in this post is based on that assumption.
April 12th, 2009 at 11:55 am
I am saying that the tea parties would be happening regardless of what “Dick Armey and the other lobbyists” were doing, despite your hilarious whacked-out conspiracy theories.
April 12th, 2009 at 11:57 am
Are you seriously arguing from the position that the Bush tax cuts or something similar should or will be around in the future?
There were no Bush “tax cuts.” They were actually tax increases, if one looks at the actual change in revenue.
But yes, I am arguing that lower tax rates are better for the economy.
April 12th, 2009 at 12:17 pm
The 2009 deficit was well over a trillion before Obama even took office.
You mean the budget deficit that was approved by the Reid-Pelosi congress, right? And you really believe a lame duck that you on the Left did everything to prevent from being effective should (or could) have done more about stopping that? But you have no problem with the massive increase that the Magic Teleprompter proposes? What a hypocrite you are.
April 12th, 2009 at 12:33 pm
The 2009 deficit is huge because revenue falls and spending rises in a recession. That’s what Obama inherited.
As for Bush’s “tax increases” — compared to what? Do you really think revenue would have been lower if the Clinton-era tax rates had been retained? If so I have a perpetual motion machine to sell you….
If tea parties would be happening without Freedom Works and the like, why is it falling to Freedom Works to organize them, publicize them, etc?
April 12th, 2009 at 12:50 pm
Do you really think revenue would have been lower if the Clinton-era tax rates had been retained?
If so I have a perpetual motion machine to sell you….
Then you know a lot more about physics than you do about economics.
April 12th, 2009 at 1:04 pm
If tax rate cuts reliably increased revenue, everyone would be for them — they’d be free money. There’d have been no reason for Reagan and Bush to stop where they did — why not drop rates even further and watch the extra revenue roll in?
But there’s no free lunch. If you cut tax rates you pay fiscally, and if you raise tax rates you pay politically. Pretending otherwise is a Madoff-style swindle: “Give me my tax cut, and I promise you’ll end up with even more money!” The benefit to high-income taxpayers is real and paid up front; the revenue boost is something you have take on faith.
April 12th, 2009 at 1:22 pm
If tea parties would be happening without Freedom Works and the like, why is it falling to Freedom Works to organize them, publicize them, etc?
If protests against the Iraq War would have been happening without Moveon, Code Pink, International A.N.S.W.E.R and the like, why did it “fall to them” to organize them, publicize them, etc.?
If tax rate cuts reliably increased revenue, everyone would be for them — they’d be free money. There’d have been no reason for Reagan and Bush to stop where they did — why not drop rates even further and watch the extra revenue roll in?
Partly because they wouldn’t have been able to get much lower rates (Reagan in particular, since he never had a Republican Congress). But also because there is a lower limit at which cutting tax rates does start to result in revenue loss. It depends on where you believe we are on the Laffer curve. Obviously both zero rates and a hundred percent rates result in zero revenue, so there’s a maximum in between.
The benefit to high-income taxpayers is real and paid up front; the revenue boost is something you have take on faith.
No faith required; history demonstrates it.
April 12th, 2009 at 1:26 pm
Actually, the biggest scare in the last year or so has been “deflation.” With both stock market drop and house price drop (even if housing should be down) the thought was that deflation was causing the drop in monetary wealth. Since more voters owe money than those with significant capital, this cannot be allowed.
When gold started dropping from over $1000 to less than $900 in the first week of March, this allowed cover for more inflation. The government does not want another 1930s deflation where the banks end up “owning everything.”
The problem for most of us isn’t government spending, it’s government waste. I was told that the Panama Canal expansion is to cost $5.2 billion. Even if it costs $10 billion, the Panamanians will have something to show for it. Unlike us, who are wasting the same amount for ACORN!!!! (yes Jim, that insult is at you!)
That is the real reason for the graph above, and why the tea parties are occurring. If we could spend 5.2 billion or 10 billion for a third interstate around Chicago, I could buy it. We don’t have the money for human waste and corruption so rampant in D.C.
And we don’t have the growth infrastructure when taxes and regulation are out of sight to ignore this waste. So people are justified starting tea parties and going Galt. And that’s reality, Jim.
April 12th, 2009 at 1:50 pm
Rand: You still haven’t answered why Congress wouldn’t be unanimously in favor of lower tax rates, since (in your fantasy world) it would give them more money to spend.
No faith required; history demonstrates it.
History demonstrates no such thing, because it does not tell us what revenue would have been in the alternate scenario. Over the past thirty years the highest marginal top rates have coincided with the best fiscal performance; but instead of concluding that “history demonstrates that higher rates raise more revenue” you conclude the opposite. History is not going to convince anyone when you can make the road not taken look like whatever you want.
Next you say that there’s a point below which tax rate cuts do cost revenue; why is it so hard to believe that Reagan and Bush both crossed that line?
Scott: The bulk of the federal government’s spending is defense, social security, medicare and medicaid. “Waste” is a convenient whipping boy, but that isn’t where the money is. The GOP pseudo budget proposal included all sorts of wishful thinking spending cuts, and even then forecast a 2009 deficit within 10% of the one we’ll actually get. ACORN has nothing to do with it (I asked previously for evidence that the ARRA funds ACORN; I don’t recall a response).
April 12th, 2009 at 1:55 pm
Rand: ANSWER, MoveOn, and CodePink are not lobbyists funded by corporations with a huge financial interest in lower tax rates. Freedom Works is like the pretend terrorists in “Die Hard” — making noises about ideology, while working for their payday.
April 12th, 2009 at 2:09 pm
Next you say that there’s a point below which tax rate cuts do cost revenue; why is it so hard to believe that Reagan and Bush both crossed that line?
Because there’s zero evidence for it. Look at the graph above. With George Bush’s “tax cuts” the deficit continued to fall (we certainly weren’t cutting spending). By your theory, it should have risen, because of the lost revenue from the “tax cuts.”
ANSWER, MoveOn, and CodePink are not lobbyists funded by corporations with a huge financial interest in lower tax rates.
No, they’re funded by people like George Soros, who has his own financial interests. And what difference does it make who is funding it? The fact remains that there is a lot of popular anger at this insane spending. Are you seriously suggesting that there is not? And if so, are you nuts?
April 12th, 2009 at 2:27 pm
Jim, what part of WASTE do you not understand???? ACORN is 100% waste, regardless of what mechanism funded it. And the majority of the 700+ billion “bailout” this year was WASTE!!! That is the major reason for the 1.7 billion above. The graph would look much more acceptable (<1 trillion) without it.
What about the out years after 2012? Blame that on Bush, even though Pelosi and Reid have controlled Congress since 2006. Come on Jim, your guys can do better, except they haven’t found a spending program other than defense that they can cut. And they have no clue on how to grow anything except tax rates for the “rich,” which is now approaching anyone with a heart beat.
April 12th, 2009 at 3:25 pm
Because they’re no smarter than you are?
April 12th, 2009 at 3:32 pm
Rand: I posit that the Bush deficits would have been much lower if he hadn’t cut tax rates. The CBO (source for your graph) agree. Why do you think the cuts will expire in 2011? Because if they’d been passed as permanent cuts Bush would have had to own up to even larger deficit projections.
I would expect people upset about this “insane spending” to disapprove of Obama’s performance. Yet his approval ratings remain in the 60s, where they’ve been since he was sworn in. His disapproval number is about 30, which is about what Bush’s approval number was when he left office. So big surprise — the people who liked Bush don’t like Obama. You see popular anger, I see sore losers backed by lobbyist money, trying to look like a spontaneous movement. For pete’s sake, the chicagoteaparty.com website was registered in 2008!
Scott: Show me evidence that ACORN wastes an interesting amount of federal money. Or that most of the ARRA spending will be wasted. Note the future tense. ARRA includes $550B of spending, spread over two years, so stimulus spending it is not responsible for anything close to $700B of the 2009 deficit. The GOP stimulus proposal (permanent tax rate cuts for the wealthy) would have increased the deficit by trillions more.
they haven’t found a spending program other than defense that they can cut
Obama is proposing an increase in defense spending.
the “rich,” which is now approaching anyone with a heart beat
Do you think that more than 2% of Americans make more than $250,000? Or do you think that 98% of taxpayers don’t have a heart beat? What’s your definition of rich?
April 12th, 2009 at 3:38 pm
McGhee: Right — Dems in Congress aren’t smart enough to spot a chance to give trillions in tax cuts to their biggest donors, spend trillions more on their pet projects, and do it all without increasing the deficit. What will the GOP do once word finally gets out?
April 12th, 2009 at 4:45 pm
Jim,
At my name is a link from the Wall Street Journal on what’s wrong with ACORN. Don’t say that it is right wing propaganda – the Journal editorial pages are (now) middle of the road. And this was before the election.
“It’s about time someone exposed this shady outfit that uses government dollars to lobby for larger government.” That’s why its 100% waste. And now we give ~5 billion to them. Sorry, you defend the indefensible here. This is not constitutional spending.
Like my old Illinois senator Everett Dirkson said (before inflation)… “a million here, a million there, pretty soon it adds up to real money.” Have you’ve been reading InstaPundit and all his comments about Porkulus? Don’t say that it’s only 550 billion for ARRA – count everything please.
And Jim, finally stop trying to play gotcha. Of course, defense spending might be going up – gee, maybe due to inflation? What is the % increase in one of the only legitimate Federal responsibilities vs. the % in pork? When you show me true reductions in Federal spending for items that are not in the Constitution, I’ll listen. But you can’t.
April 12th, 2009 at 4:46 pm
Why do you think the cuts will expire in 2011?
Because Democrats run the Congress, and they hate the idea of people keeping more of their own money, even if it means increased government revenues. Remember in the debates when Senator Obama said that he would increase capital gains taxes, even if it resulted in decreased revenue, because it had to be done in the name of “fairness”?
I do, even if you want to feign amnesia.
April 12th, 2009 at 5:28 pm
Scott: The WSJ article does not say anything about ACORN using government money to lobby for larger government. Nor does it say anything about $5 billion — you’re just making stuff up.
Instapundit can get all worked up about earmarks and ARRA, but it doesn’t change the fact that earmarks are a tiny fraction of the budget and ARRA’s $550B in spending over two years, not the $700B in one year that you claimed. Look it up!
Rand: It wasn’t Democrats who put an expiration date on the Bush tax cuts, it was Bush and a GOP Congress in 2001 and 2003, because they wanted to minimize the projected long-term deficit impact. Get it? Even they knew that they were increasing the deficit.
As for Obama’s comment, he wasn’t interested in getting into an argument about short vs. long term capital gains tax revenues. You can boost revenues in the short term by temporarily cutting capital gains tax rates — people with appreciated assets will grab the chance to sell. But if you’d left the rates alone they would have been sold eventually, and there would have even more revenue. Like a good politician, Obama changed the subject to a simpler and more compelling argument: that it’s unfair to tax unearned income less than earned income. I don’t for a second believe that Obama thinks he could raise more revenue in the long term by dropping capital gains taxes.
[Democrats] hate the idea of people keeping more of their own money
Geez, what color is the sky on your planet? Do you think Democrats have horns and tails too? Democrats would love to have more revenue to spend. Democrats don’t hate people who are rich — they ask them for campaign donations. I’ve got the phone calls and letters to prove it.
April 12th, 2009 at 5:39 pm
To clarify: the WSJ article asserts that ACORN “uses government money to lobby for larger government” but does not offer evidence to support the claim. They report that ACORN has received government money, and that ACORN lobbies the government, but not that the one paid for the other. You could just as well claim that GM and Lockheed Martin use government money to lobby the government.
Most of the WSJ article is hysterics about “voter fraud”, by which they mean ACORN employees defrauding ACORN by filing bogus registration forms — a phenomenon that has no effect on elections. And if this article is supposed to show government waste — come on! The biggest grant they could find was $16 million over 10 years. That’s less than 1 millionth of the federal budget. It wouldn’t even cover Sarah Palin’s road to nowhere (the $25M road she built to access the non-existent “Bridge to Nowhere”). Surely you can come up with a bigger target than ACORN.
April 12th, 2009 at 5:50 pm
Rand: It wasn’t Democrats who put an expiration date on the Bush tax cuts, it was Bush and a GOP Congress in 2001 and 2003, because they wanted to minimize the projected long-term deficit impact.
No, they put an expiration date on it because it was the only way they could get it past a Senate that was essentially tied. But please, keep rewriting history. And beclowning yourself here.
You could just as well claim that GM and Lockheed Martin use government money to lobby the government.
You think they don’t? Did you know that “gullible” isn’t in the dictionary?
April 12th, 2009 at 6:00 pm
Jim,
I’m done with you. Rand needs to kick you out.
By your own admission, ACORN is getting government funds. The last number I saw was 5 billion during the 700 billion package that was passed with Olympia Snow, Specter, and Collins support. Maybe it turned out to be less, but if it’s even one dollar, it’s wrong.
I did not claim that the WSJ said 5 billion. But my direct quote was taken from the article. I copyed and pasted it, and went back to check. It’s still there.
I can’t argue with fools anymore.
April 12th, 2009 at 6:18 pm
Do you think Democrats have horns and tails too?
No, I just think they’re susceptible to the very human failing of envy.
Democrats would love to have more revenue to spend.
Obviously, they have conflicting values. Plus, like you, they’re economically ignorant.
Democrats don’t hate people who are rich — they ask them for campaign donations. I’ve got the phone calls and letters to prove it.
Of course they like rich people who give their money to Democrats. What’s your point?
April 12th, 2009 at 7:30 pm
http://www.rasmussenreports.com/var/plain/storage/images/media/obama_index_graphics/obama_index_april_12_2009/213308-1-eng-US/obama_index_april_12_2009.jpg
You are smoking crack.
April 12th, 2009 at 7:32 pm
“I would expect people upset about this “insane spending” to disapprove of Obama’s performance. Yet his approval ratings remain in the 60s, where they’ve been since he was sworn in. His disapproval number is about 30, which is about what Bush’s approval number was when he left office.”
The above graph was a response to the above quote.
Obama is about to sink under 50% Jim. A long way to the bottom and plenty of time to get there.
April 12th, 2009 at 8:02 pm
Back to the topic of tea party organizing…I know the guy who’s organizing the Denver event, and never once have I heard him mention Freedom Works, Dick Armey, or any corporations/foundations being the “real” organizers behind any of it.
What I have heard him say is that he gets constantly hectored by those who support the tea party idea, but blame the Republican and Democrat parties equally, and get incensed whenever they hear somehow that the state or national GOP might be calling the shots (example: the state GOP posted some verbiage on its website that implied it was sponsoring the Denver event, and it took him much effort over several days to calm the activists down).
This assertion that the tea party movement or any organizing or activism from the right cannot not be paid for by Big Corporations We Don’t Like(tm) and masterminded for the unthinking right-wing rubes by the strategeric geniuses in the command-and-control center deep in the bowels of Castle Rove is, as others have been pointing out lately, nothing but projection. The left gets support from wealthy donors like Soros, Bridges, Stryker, Gill, et al, and has a centralized messaging and coordination infrastructure the likes of which even Karl Rove, Dick Armey, and Grover Norquist could only dream of, but they assume that since the right is evil, they must have all that the left has and more.
And don’t bother, Jim, calling this hyperbole or paranoid fantasies or whatever dismissal you’ve already devised for a reply — the aforementioned infrastructure is all documented in Matt Bai’s “The Argument”, and in Fred Barnes’ article “The Colorado Model” in the Weekly Standard last August. And it’s been publicly acknowledged by the participants. And it seems a new head of the messaging hydra pops into public view every couple of weeks lately (e.g. the CAP breakfasts and Journo-List).
April 12th, 2009 at 8:08 pm
To complete the thought about the Denver event, the activists here are very sensitive about a party or individual or organization hijacking the tea party phenomenon for their own ends. If there was any indication that the Denver event was an exercise in astroturfing, they would be raising quite a stink about it.
I have read online similar stories about tea parties in other cities.
April 12th, 2009 at 10:06 pm
[I seem to arrive at these conversations so late]
“You could just as well claim that GM and Lockheed Martin use government money to lobby the government.”
Rand:
You think they don’t? Did you know that “gullible” isn’t in the dictionary?
No, but a serendipitous side effect of tax dollars paid to GM and Lockheed Martin is the production of tangible, apolitical goods.
The impetus for the tea party in my own community is being provided by students attending three colleges in the area.
April 12th, 2009 at 10:21 pm
[...] ITEM: The current astroturfed meme on the Left/in the media is, “Oh, those tea parties are just silly! What do people really have to be upset about?” Well, Rand Simberg provides Exhibit A: [...]
April 13th, 2009 at 4:39 am
Scott: Should Rand kick out anyone who calls you on your made-up facts? The $5B for ACORN is a fantasy.
Mike: Look at more than one poll. Gallup reports today that “Over two-thirds of Americans (71%) have a great deal or a fair amount of confidence in President Obama to do the right thing for the economy.” NYT/CBS reported April 7 that Obama had 66% approval, 24% disapproval. The RCP average of polls (including yours) has Obama at 60/30.
Rand: If Bush’s tax cuts had been projected to be revenue-neutral, much less revenue-enhancing, they would not have been subject to PAYGO rules, and wouldn’t have needed expiration dates. They do because everyone knew that they were revenue-negative. Remember, these were the projections of a GOP-controlled Congress.
T.L. and danae: I’m sure there are sincere people at tea parties, just not very many relative to the people who support the president’s policies. And if FreedomWorks wasn’t involved why does their website say things like:
And:
And:
And:
[Denver is on the list]
April 13th, 2009 at 5:53 am
Jim, how much is Soros paying you?
April 13th, 2009 at 6:49 am
Specific Question for Jim,
I make stuff for a living, all the stuff I make is built in the USA. In the last two years I’ve exported more than 1M of electronics (gross not net) built in the USA to China.
I don’t make money shuffling paper.
What is a fair total tax rate for a business man like me?
, how much of MY hard earned income should the government take? 25%,50%,75%,90%?
In Q4 2008 things were slow, so we ended up with inventory we id not sell, What do you think my marginal tax rate was on that inventory?
What tax rate will drive me to build things in Mexico and setup an offshore distribution in a low/zero tax area? Hint: how many NEW international manufacturing business are being set up in the USA?
The fundamental problem is that the government is spending 1.85T that’s 6K of credit card bills for EVERY man women and child, 6K is not the amount of government, its the amount of government debt added each year.
The current government CBO debit at the end of 2019 is > 20T (11.3 + ~9.5 from the chart) Thats 65K. Just the interest on that amount of debit will be more than 10K for a family of four.
Our est 2008 GDP is 14.5T a 1.85T deficit makes 12.7% of GDP. That number is higher than many third world economies where the IMF has had to intervene. We just can’t afford that much government.
April 13th, 2009 at 7:40 am
Jim here cited presidential approval polls for Obama to support his argument. The thing is polls are bullshit. How do you know that people who answered the poll were telling the truth about what they really feel? You don’t. And in this current political climate there’s the added problem that saying you disapprove of Obama means to many people that you disapprove of a black president. A lot of people aren’t going to say that, just like a lot of people who voted against Obama have quietly removed the McCain/Palin bumperstickers from their cars rather than deal with the fallout. (Before the election I used to see tons of McCain/Palin bumperstickers when driving around Orlando. All I’ve seen since the election are the Obama ones, with the exception of one for Bob Barr.)
Anyway, you know, take those 60% approval figures with a grain of salt.
April 13th, 2009 at 7:52 am
Leland: Soros doesn’t pay me anything.
Paul: The 2009 deficit isn’t Obama’s — all but $275B or so of stimulus spending was there when he arrived, and there was going to be some deficit-increasing stimulus no matter who was in the White House (the GOP proposed much larger deficits). If you really care about government waste then take a look at student loans. We could save $90B by loaning directly (as Obama proposes) rather than through middlemen (as Bush did). Naturally the middlemen are protecting their windfall. Will you hear any support for Obama’s proposal at tea parties? For that matter, were there any tea parties when Bush ran the debt up to where it is today?
Andrea: Polls predicted the election results very accurately, and they all show much stronger support for Obama than for the Congressional GOP that is opposing his policies. “You can’t trust polls” is the last refuge of someone who doesn’t like what they are saying.
April 13th, 2009 at 8:18 am
Late to the party here, but I don’t think liberals are “panicked” by teaparties. They are either laughing at the folks who show up (see Maddow, Rachel) or believe that the attendees are confused / deluded / generally out of touch. For example, the Nebraska teaparty is protesting “taxation without representation.”
Except Nebraska does in fact have representation in Congress, and for 95% of Americans the policy proposed is a tax cut.
April 13th, 2009 at 8:23 am
for 95% of Americans the policy proposed is a tax cut.
Please stop repeating that lie.
April 13th, 2009 at 8:29 am
Rand, my source for the tax cut is here. If you have a different source, please produce it.
April 13th, 2009 at 8:44 am
That chart is a lie. It does not depict tax cuts. Handing someone a check is not a tax cut.
April 13th, 2009 at 9:13 am
Leland: Soros doesn’t pay me anything.
He must be paying you. That’s the only possible explanation for you doing what you do. You implied that yourself in your first comment, and then out right suggested it is the case later. Obviously people don’t do stuff like you do unless they are paid to do it. So apparently Soros is paying you, or you argument has no merit.
April 13th, 2009 at 9:58 am
Rand – the chart shows tax rates. If the rates are in fact correct, then it is by definition a tax cut. You may not like what it says, and you may be even unhappier with cutting a check to refund / offset Medicare and Social Security taxes, but it is a tax rate cut.
There is absolutely no way to construe the tax rate cut as a tax rate increase for people making less then $250,000.
April 13th, 2009 at 10:05 am
Until I see how those “tax rates” were derived, I continue to call bullshit. And no, cutting a check to refund/offset payroll tax is not a tax rate cut, because there is no correlation between the size of the check and the amount of payroll tax owed. To call it that is sophistry.
April 13th, 2009 at 10:20 am
Well, Rand, I have no control over what you believe. But “belief” and “fact” are different things.
April 13th, 2009 at 10:27 am
My belief (that you cannot cut income tax rates on people who do not pay income tax) is a fact. To pretend otherwise is demagoguery, which is how The One got elected.
April 13th, 2009 at 10:35 am
Of course you can cut income tax rates on people who get full refunds. It’s not like the money wasn’t withheld from their paychecks.
April 13th, 2009 at 10:38 am
Of course you can cut income tax rates on people who get full refunds.
I didn’t say you couldn’t.
April 13th, 2009 at 11:24 am
Again for Jim, a very explicit question:
I make stuff for a living, all the stuff I make is built in the USA. In the last two years I’ve exported more than 1M of electronics (gross not net) built in the USA to China.
I don’t make money shuffling paper.
What is a fair total tax rate for a business man like me?
, how much of MY hard earned income should the government take? 25%,50%,75%,90%?
In Q4 2008 things were slow, so we ended up with inventory we id not sell, What do you think my marginal tax rate was on that inventory?
What tax rate will drive me to build things in Mexico and setup an offshore distribution in a low/zero tax area? Hint: how many NEW international manufacturing business are being set up in the USA?
BTW arguing that it was bad under bush is irrelevant,
I think GWB was a disaster. He too the worst parts of the Republican socal controls, and spent like a drunken sailor, it was bad really bad under bush, but this is worse. Please answer the question I asked?
Three precise answers with numbers and percent signs attached.
April 13th, 2009 at 11:26 am
Of course you can cut income tax rates on people who get full refunds. It’s not like the money wasn’t withheld from their paychecks.
According to Form W-4 line 7, if they received a full refund and are expecting a full refund, then they don’t have to have any money withheld. So yes, it could be like their money was never withheld from their paychecks (except for FICA, but everybody wants social security, right?).
April 13th, 2009 at 11:48 am
> And if FreedomWorks wasn’t involved why does their website say things like:
Because they’re trying to gain some credit by association.
Here’s a somewhat similar example. Obama during the campaign said that he was organizing anti-war protests. Does that mean that he started the anti-war movement? Does that mean that he controlled the anti-war movement?
April 13th, 2009 at 12:32 pm
Rand: There is such a thing as a negative income tax — Milton Friedman was a fan.
Paul: I think Obama’s tax plan is more than fair for you. If you disagree, build your electronics in Puerto Rico.
Andy: Obama never said he’d “launched” the anti-war movement, or called his website the anti-war “HQ”. That’s what FreedomWorks claims about the tea parties. And I’m not saying that FreedomWorks controls the tea parties, just that they’ve played a major role, and that their clients stand to benefit financially.
April 13th, 2009 at 12:36 pm
Paul: To elaborate, how is this worse than Bush? If you’re grossing $500k a year selling electronics you probably aren’t netting more than $250k. So your taxes aren’t going up. If you are netting more than $250k, congratulations, you’re in the top 2%. You’ll see a slightly higher tax rate on the income over the $250k line, and the 95% of tax payers who are less fortunate than you will be better off at tax time. And that has you all worked up?
April 13th, 2009 at 12:40 pm
There is such a thing as a negative income tax — Milton Friedman was a fan.
I didn’t say there wasn’t. And in fact I’m open to a negative income tax under some circumstances. But we should call it what it is, and not continue to promulgate the lie that that it is a “tax cut.”
April 13th, 2009 at 12:52 pm
Jim,
If you add up, income, state income, sales, ssi, sdi, property taxes, vehicle taxes gas taxes, etc…
Then over 50% of my income goes to the government.
The direct marginal income tax rate on the inventory I could not sell in Q4 is 9.3+35 = 44.3 I have proven over and over I can take capital and create American job and wealth, yet you take the capital from me and give it to someone that has proven they can’t run a profitable business (GM, AIG ), its not only wrong its stupid.
April 13th, 2009 at 1:02 pm
I hate when the comments get off on a tangent about the little things instead of the big picture the post was about. Jim et. al. seem okay with deficits that will burden MY children and grandchildren for years to come. I don’t know how any parent could look at those numbers and think they are okay. How anyone not a partisan ideologue could look at those numbers and think economic growth will be sustainable with such a debt burden has no grasp of how much money is involved. The tea parties ARE grassroots. The organized groups are Johnny-come-lately people jumping on the band wagon. Look at who started the organizing. Did other groups help? In some cases, yes. I thought the stories about organizers finding out what’s involved were telling because you never heard about who did all of the legwork fro the anti war protests. Who got the permits, the insurance, the security? When you look at the overt bias in the media supporting the buff arms, the dog and the One it’s no wonder people are organizing.
April 13th, 2009 at 1:28 pm
Paul: That was all true before Obama. And while it feels wrong to bail out failing businesses, if the alternative is a longer recession that will cost you more than the bailout, it’s a smart move.
Bill: Don’t complain to me about deficits unless you voted against Reagan and both Bushes. They’re the reason the debt is so high, and they’re the reason Obama’s deficits will start so high. To support the GOP prior to 2009 and only now get concerned about debt is the height of hypocrisy.
I’m not okay with huge deficits. It’s one reason I opposed the Iraq war. It’s why I think we’d be better off with $300B of defense spending (rather than $500B+). The median American got nothing out of the Bush years, while the wealthy, defense and homeland security contractors, and resource extraction companies made out like bandits. Those are the places to start looking for savings now.
April 13th, 2009 at 1:33 pm
Reading through this, I’m struck by how similar this is to the circumstances after September 11 in 2001 and 2002. A single party was in control of Congress and the presidency and huge budget deficits were incurred in order to deal with a huge national crisis. When Bush did it, he managed to create the largest deficits in US history along with two wars and an immensely costly occupation in Iraq.
The question then is what will Obama and the Democrats in Congress do with this current crisis? Unfortunately, the first thing I see is a deficit several times larger than any previous deficit as a percentage of GDP since the Second World War. In fact, deficits in the 20th Century have only been higher than this during the two world wars. I don’t see the current circumstances as being worthy of this level of spending.
Second, while Obama remains popular, I don’t see that popularity surviving through to the end of the year. There’s been a significant decline since Obama’s inauguration and it will only get worse when the results of this enormous crest of spending are seen. My take is that Obama’s approval ratings will be well below 50% by December.
This decline in popularity combined with the incredible spending surge indicates to me that Democrats are attempting to cash out on the 2008 election ASAP. I will be very surprised if they can retain control of the House given the current circumstances.
Third, there’s been some rather pointless discussion about whether Obama has or hasn’t raised taxes on 95% of the populace. He certainly has raised excise taxes on cigarettes, that alone covers more than 5% of the populace. The carbon cap and trade system will affect everyone, not just the 5% richest people.
Moving on, we also aren’t considering any year after the current financial year. Obviously, Obama will let expire various tax cuts implemented in Bush’s administration, which will result in tax increases. But I wonder how much tax rates will have to be increased to cover some of the current spending.
Finally, the redirecting of federal money to Democrat and liberal lobbying groups is reprehensible. I don’t know if ACORN is getting $5 billion. That sounds a gross exaggeration. However, they are getting a lot of money under the current stimulus plan through HUD.
It also sounds like there’s a lot of non-profits getting money through government these days. I’m currently leaning towards not donating to any charity that receives federal funds directly. Much has been said of the corruption of the charity world by politics and government money, but I see this as a critical problem over the next few years.
April 13th, 2009 at 1:33 pm
Don’t complain to me about deficits unless you voted against Reagan and both Bushes.
You would have to be insane to think that either Gore or Kerry (or Clinton, with a Democrat Congress) would have been better for deficits than either Bush or Reagan. No, I’m not happy with George Bush’s deficits, but that doesn’t mean that I want to double (actually triple or quadruple or quintuple) down on them with a real spender, like Barack Obama. Actually, one of the very few things that I liked about John McCain was that he would at least have been a fiscal tightwad.
And the first two months of an Obama administration, with a Democrat Congress, shows we were right, as the graph above graphically shows.
April 13th, 2009 at 3:29 pm
Some in these comments are asking me not to believe my lying eyes. That chart is unbelievable. People are talking about getting rid of the dollar. This is nothing less than the destruction of America. What a coincidence that it occurs during the presidency of a member of those that for decades have advocated that in their writings.
Oh, I’m sorry, he threw them under the bus… never mind.
April 13th, 2009 at 4:08 pm
“On the expiration of the “Bush” tax cuts, the tax brackets will change as follows:
Brackets 10, 25, 28, 33 and 35 percent will be increased by 50%, 12%, 10.7%, 9.1% and 13.1% percent, respectively, to 15, 28, 31, 36 and 39.6 percent. Those of you at the bottom of the tax barrel will see a 50% tax increase. Still think that those tax cuts are strictly for the wealthy?? Well, have a nice day then. The child tax credit will be cut in half (damn those wealthy families with children) so in reality, the upper and lower classes benefited the most from the tax changes, with the lower class receiving far and away the largest benefit.”
Jim, I didn’t like it but it was better than the alternative. I still wrote my Rep. to oppose budgets. MANY conservatives, including me were against TARP and weren’t shy about saying so. Now, about those tax cuts. Oh, don’t forget the AMT. So Obama gives me 400 and takes back 1680. Must be that new math.
Why did Dems wait until Bush was gone for the 09 omnibus? Because he said he would veto it. So 09 is on the Dems. Complaining about Bush and not Obama when he will double the national debt in 11 years vs the past 75 is the creme de la creme of hypocrisy.
April 13th, 2009 at 4:11 pm
“Mike: Look at more than one poll. Gallup reports today that “Over two-thirds of Americans (71%) have a great deal or a fair amount of confidence in President Obama to do the right thing for the economy.” NYT/CBS reported April 7 that Obama had 66% approval, 24% disapproval. The RCP average of polls (including yours) has Obama at 60/30.”
Why Jim?
Rasmussens track record for accuracy dwarfs Gallups and the others. Why dilute a good data source with noise?
You are whistling past the graveyard. Why not be honest with yourself and admit it?
April 13th, 2009 at 4:14 pm
And he still is doing no better today:
http://www.rasmussenreports.com/var/plain/storage/images/media/obama_index_graphics/obama_index_april_13_2009/213437-1-eng-US/obama_index_april_13_2009.jpg
More good news for democrrats, Republicans about even on the economy now:
http://www.rasmussenreports.com/public_content/politics/mood_of_america/trust_on_issues/trust_on_issues
April 13th, 2009 at 4:18 pm
ken, I have to admit, if I were US President and intent on destroying the US, this would be a very effective first strike. A vast excess of spending coupled with shifting the tax burden onto a minority.
April 13th, 2009 at 4:20 pm
“Andrea: Polls predicted the election results very accurately, and they all show much stronger support for Obama than for the Congressional GOP that is opposing his policies. “You can’t trust polls” is the last refuge of someone who doesn’t like what they are saying.”
Yep, and the one poll that called it spot-on is Rasmussen, which you don’t seem to like when your candidate ain’t doing so well anymore.
April 13th, 2009 at 4:33 pm
No kidding Mike, That CBS/NYT poll oversampled Dems by 16%. That kind of oversampling could make Gordon Brown look good.
April 13th, 2009 at 4:40 pm
Rand: The record for the last 28 years is clear: Republican presidents have exploded the deficit, the one Democrat got it under control. You choose to prefer your preconceived theories over the facts in front of you. The idea that the chart says anything about Obama is ridiculous. The chart would look much worse with McCain’s tax plans.
Bill: Bush doubled the debt in only 8 years. Obama isn’t repealing the Bush tax cuts for 98% of taxpayers, and he’s giving a break to 95%. Higher cigarette taxes are good public health policy and good fiscal policy. ARRA includes an AMT fix. If Bush hadn’t left Obama a wrecked economy the deficit would be fine.
Mike: So you only pay attention to the poll with the lowest approval rating for Obama — how convenient for you.
I’m under no illusions that Obama’s popularity will necessarily last, there are a million things that could change. But the idea that the American people will rise up and oppose him because of deficit projections flies in the face of all evidence, past and present. Reagan and George W. Bush presided over huge deficit increases, and it did not stop them from winning reelection. Obama’s approval rating has hardly moved since he signed ARRA and announced his budget. My guess is that the voters will give him a year or so grace period on the economy. If it isn’t improving in 2010, or if it turns south again in 2011 or 2012, he’ll be in trouble. But the deficit has very little to do with whether the economy will be growing in 2011 or 2012.
April 13th, 2009 at 4:57 pm
The record for the last 28 years is clear: Republican presidents have exploded the deficit, the one Democrat got it under control.
Only if one completely ignores what was happening on the Hill during that period. Are you really so monumentally stupid and primitive as to think that the Chief makes the rain fall and the crops grow and deficit reduced? That only the president has such power?
I really don’t understand how you expect that anyone can take you seriously after this absolute bullshit and pathetic attempt to rewrite history.
You continue to make a complete laughingstock of yourself here. Are you a really such a glutton for punishment?
April 13th, 2009 at 5:26 pm
Jim, thing is the 2008-2009 budget shortfall is about the same amount as in Bush’s previous seven years combined (using the graph above), which was already noted as a really bad time for budget deficits. So how does Obama fit into your characterization about Democrat presidents having lower deficits. Sure Obama got the worst hand ever dealt to a new president since Herbert Hoover, but there’s no justification for the current level of spending.
To be blunt, I don’t see a “million things” taking down the Obama administration. Instead, I see a poisonous disregard for the future taking down the Obama adminstration.
April 13th, 2009 at 5:26 pm
“Mike: So you only pay attention to the poll with the lowest approval rating for Obama — how convenient for you. ”
So Jim, you happen to ignore the one poll with an unblemished record while citing one of the ones with the worst recent track record which happens to be the one with the highest approval number.
How convient for you.
How’s your whistle holding up?
April 13th, 2009 at 6:08 pm
So Jim, losng 4 of something is bad and losing 8 is better? I’ll remind you again, this isn’t Bush vs Obama, it’s out of control spending vs complete annihilation spending. I don’t think anyone here was happy with Bush spending. Republicans in Congress forgot how they got there. Though they are pikers compared to Pelosi and Reid. So now we have a perfect storm. Obama delegated his budget writing to Pelosi and voila! More spending than ever before in the history of the nation by a trillion dollars with falling receipts. If I punch you in the nose and you say that’s bad. Shooting you won’t be better than a punch in the nose, it will be worse. If spending a bunch of money is bad, spending even more by half can’t be good either.
April 13th, 2009 at 7:44 pm
Andrew Sullivan says Bush is responsible for $32 trillion in borrowing + future unfunded mandates.
http://andrewsullivan.theatlantic.com/the_daily_dish/2007/12/the-cost-of-bus.html
I think a lot of those increases in unfunded mandates (Social Security, Medicare) originated with policies prior to Bush.
April 14th, 2009 at 5:19 am
Andrew Sullivan went completely out of his mind from Bush derangement several years ago.
April 14th, 2009 at 7:36 am
Rand:
Only if one completely ignores what was happening on the Hill during that period.
Carter and Reagan had Dem Congresses, which one ran bigger deficits? Clinton and George W. Bush both had GOP Congresses; one ran surpluses, the other doubled the national debt. Any way you slice it, the modern GOP is the deficit champion.
Are you really so monumentally stupid…absolute bullshit and pathetic attempt… complete laughingstock…
Is name-calling the best you’ve got?
Karl:
Sure Obama got the worst hand ever dealt to a new president since Herbert Hoover, but there’s no justification for the current level of spending.
What spending would you cut? The deficit is exploding because revenue is falling, and anti-recessionary stimulus and social spending are rising. Both factors are the expected consequence of a deep recession, which began long before Obama got there. Cutting back on spending at this point would make the recession deeper.
Mike:
So Jim, you happen to ignore the one poll with an unblemished record…
I didn’t ignore it, it’s part of the RCP average. You’re ignoring everything but your favorite poll. Btw, there’s no such thing as a poll with an unblemished record. Rasmussen had Obama winning the New Hampshire primary by 7 points; he lost by 3.
Bill:
I could take this tea party thing more seriously if its participants hadn’t been silent during reasonably good economic times, which is when the government should be able to balance its books, and only sprang to life when there was an economic crisis that threatened millions of the less fortunate. The impression is that it’s okay for the GOP to borrow trillions to pay for tax breaks for the wealthy and an unnecessary war, but we can’t let Democrats try to protect the poor and unemployed from an economic disaster that they had no part in creating.
April 14th, 2009 at 7:37 am
Rand: Whatever you think of Andrew Sullivan, he was citing the Comptroller General of the United States and head of the GAO, who presumably is not insane.
April 14th, 2009 at 8:49 am
Sullivan refers to the $32 trillion as “The Cost Of Bush.” That assessment can be true only if the increase is due to new legislation signed into law by Bush. I have a hard time believing that. It seems highly likely that the vast bulk of this increase was inherited from past administrations – especially the architects of our two biggest entitlements, FDR and LBJ.
Most of the fiscal exposure is due to Social Security and Medicare promises. I vaguely recall that Medicare estimates are always increasing, because they’re constantly finding out that the old estimates were off.
Now, Bush did sign Ted Kennedy’s drug entitlement program, and that’s gonna cost big. But double-digit trillions?
The entitlement programs are the easier portion of the fiscal exposure to deal with (political resistance notwithstanding) – simply reduce or cancel the programs. Reneging on debt is a far different story.
April 14th, 2009 at 12:24 pm
> Bill: Don’t complain to me about deficits unless you voted against Reagan and both Bushes.
That’s nonsense.
If deficits are bad, then complaining about them is appropriate even if one previously didn’t complain.
Jim’s argument is basically “you did wrong stuff so I get to do more wrong stuff.”
> they’re the reason Obama’s deficits will start so high.
Obama is tripling Bush’s deficit and that’s Bush’s fault?
> To support the GOP prior to 2009 and only now get concerned about debt is the height of hypocrisy.
Note that Jim avoids the question of being correct.
> I’m not okay with huge deficits.
Jim is okay enough with huge deficits to push them.
Interestingly enough, Jim doesn’t extend the same courtesy to folks who he associates with smaller deficits.
April 14th, 2009 at 12:26 pm
> Obama isn’t repealing the Bush tax cuts for 98% of taxpayers, and he’s giving a break to 95%.
Not if you count the other increased taxes that they’ll be paying
> Higher cigarette taxes are good public health policy and good fiscal policy.
In other words, any tax increase “for their good” doesn’t count….
April 14th, 2009 at 6:14 pm
Obama is tripling Bush’s deficit and that’s Bush’s fault?
Yes. The 2009 deficit was going to be well over a trillion no matter what Obama did — the year started before he was in office. The 2009 deficit is a reflection of the state of the economy, which is Bush’s legacy.
If deficits are bad, then complaining about them is appropriate even if one previously didn’t complain.
The point is that this complaining is transparently insincere. If you only complain about Democratic deficits you aren’t complaining about deficits, you’re complaining about Democrats.
Jim is okay enough with huge deficits to push them.
Yes, when they are better than the alternative, and right now that’s the case. There was no output gap, and therefore little justification for deficit spending, from 2003 to 2008.
April 14th, 2009 at 6:27 pm
Jim, you wrote:
Karl:
What spending would you cut? The deficit is exploding because revenue is falling, and anti-recessionary stimulus and social spending are rising. Both factors are the expected consequence of a deep recession, which began long before Obama got there. Cutting back on spending at this point would make the recession deeper.
Halt the bailouts for starters. Bankruptcy court is for these companies. A deep recession is warranted under the circumstances. Pay only what is required under FDIC obligations. Don’t pay off on what wasn’t insured. Eliminate Fannie Mae and Freddie Mac. Put off ideological programs like universal healthcare and carbon credits.
Reduce the overhead of hiring US workers. Reduce Social Security taxes (and pay for that by reducing Social Security payouts). Eliminate employer tax rebates and government mandates for employee health plans. Neuter labor union laws. Eliminate the AMA’s monopoly on granting professional status for doctors.
If I could, I would greatly reduce subsidies. Reduce or eliminate farm subsidies, cost plus contracts, education loans, energy subsidies for fossil fuels, nuclear, and renewable. Gradually end entitlement programs like Social Security and the medicare/medicaid programs. Switch the federal government retirement program over to 401Ks.
I would reduce government bureaucracy. For example, there are easy targets like HUD, Amtrak, or the ATF. Just end those programs. A number of others should be repositioned to take advantage of the huge US economy. For example, the defense industry needs to be turned into a far more competitive industry. Any gear which you can’t get three or more competitors for, should eventually be phased out from the US military. This includes such things as aircraft carriers and fighter jets.
And to briefly forestall accusations of naivety, I realize that the US probably won’t implement most of these ever. Jim was just asking what I’d do, if I had this magic wand.
April 14th, 2009 at 7:49 pm
Here’s a tiny tidbit of reform: eliminate OSHA. Let the people who have an actual stake in workplace safety – insurers – write the safety regs. Because of competing insurers the regs won’t be too draconian, and because of the cost of workplace unsafety they won’t be too lax.
April 15th, 2009 at 6:52 am
> The point is that this complaining is transparently insincere.
Not at all.
And, in some sense, it doesn’t matter. It’s good to oppose bad policy, regardless of the reason for said opposition.
> The 2009 deficit is a reflection of the state of the economy, which is Bush’s legacy.
Umm, Bush pretty much let the left run Fannie, Freddie, and CRA.
Bush’s budgets had less spending than the Dem proposals. (Yup, even the prescription drug monstrosity.)
I note that the dem congress didn’t even bother to pass a budget during 2008. Instead, they ran continuing resolutions, hoping for a Dem president.
April 15th, 2009 at 11:47 am
The record for the last 28 years is clear: Republican presidents have exploded the deficit, the one Democrat got it under control
All revenue and spending bills start in the house of representatives. The democrats controlled congress during ALL of the deficit spending of the last 35 years while the republican congress was in control during the only time of surplus during that period.
April 15th, 2009 at 1:26 pm
Andy: Fannie, Freddie and the CRA didn’t cause the housing bubble, the financial crisis, or the recession. That’s just GOP wishful thinking.
Dennis: The protests are aimed at Obama. If this was about Congress the protests would have started in 2007. Voters know that a GOP Congress doesn’t mean low deficits — from 2001 to 2007 it was just the opposite.
April 15th, 2009 at 8:31 pm
I recall that Bill Clinton was dragged kicking and screaming to sign those deficit-cutting reforms in 1995.
Anyone think the deficit would have been brought under control if HillaryCare had passed?
April 16th, 2009 at 6:29 am
> Andy: Fannie, Freddie and the CRA didn’t cause the housing bubble, the financial crisis, or the recession.
Pull my other leg.
Note that Jim thinks that because congressional republicans and bush allowed deficits in 2001-2007, no one can oppose much larger deficits now. I wonder if he’ll complete the circle and insis that his support for large deficits now entitles him to criticize smaller deficits later if they’re under a govt that he doesn’t like.
Shorter Jim – the left is always correct.
April 16th, 2009 at 7:15 am
Andy: Fannie, Freddie and the CRA didn’t cause the housing bubble, the financial crisis, or the recession.
I agree with the statement superficially, but Jim, you’re missing the big picture. The thing that is missing is the role these organizations and laws played in making a bad situation much worse. Fannie Mae and Freddie Mac, due to their special status with the US government enjoyed cheaper credit than their competitors. They used this advantage to jump into the kinds of investments that triggered the current recession. The CRA probably had modest effect, but it mandated unsound business practices at a time when the markets were already fragile due to systemic risk.
Sure, it’s likely that banks would have engaged in the same sort of behavior even without government interference. But what you miss is that these banks would both be more limited in the damage they could cause and have less incentive to engage in unsound practices.
April 17th, 2009 at 1:58 pm
> Fannie Mae and Freddie Mac, due to their special status with the US government enjoyed cheaper credit than their competitors.
You’re forgetting that the US govt propped up their stock price by giving its ownership by banks special treatment. This pretty much guaranteed that banks would own too much Fannie and Freddie stock, magnifying the damage to the financial sector when Fannie and Freddie went down.
April 19th, 2009 at 10:07 am
You’re forgetting that the US govt propped up their stock price by giving its ownership by banks special treatment. This pretty much guaranteed that banks would own too much Fannie and Freddie stock, magnifying the damage to the financial sector when Fannie and Freddie went down.
Andy, you can’t forget what you didn’t know. Do you have any references for this so I can look it up?